Indonesia seeks additional $4b to $6b in new loans
Indonesia seeks additional $4b to $6b in new loans
NEW YORK (Agencies): Indonesian officials said Wednesday that they will seek an additional US$4 billion to $6 billion in new loans from international banks and expressed confidence that they would get it.
Meanwhile, the International Monetary Fund is expected to release $1 billion of aid to Indonesia as early as next week, to assist the struggling country in getting back on its feet, IMF and Indonesian government officials said as reported by the Associated Press.
The $1 billion in aid would be part of a $43 billion package the IMF approved in October. The latest installment of the aid has been delayed by concerns about economic and political instability in Indonesia.
David Burton, a senior advisor for Asian affairs at the IMF, said he was "hopeful and confident" that the agency would release the funds.
The announcement came at the kickoff of an international tour by Indonesian officials to visit banks in the United States, Japan and Europe. The Indonesians are seeking new loans and also want to arrange new repayment terms for about $80 billion in existing bank and corporate debt.
"This was a very constructive meeting," said Robert Strong, Chase Manhattan Corp.'s senior credit officer, who is representing Chase in the discussions. "I am optimistic that (the program) will move forward."
So far, international banks have restructured $1.4 billion out of $4 billion to $5 billion in trade financings to Indonesia.
Indonesian banks owe an additional $8 billion to $9 billion in short-term debt, set to expire by April 30, 1999, to international banks. Of that amount, Indonesia's goal is to get at least $6 billion extended to as long as four years, Strong said.
An additional $64 billion in individual corporate debt will be restructured on a case-by-case basis, with the backing of the newly formed Indonesian Debt Restructuring Agency, Strong said.
Asia's financial meltdown, which began last summer, has hit Indonesia the hardest of all the economies in the region.
The value of the rupiah has dropped more than 80 percent in the past 11 months. Inflation is soaring and unemployment is climbing as hundreds of companies find themselves unable to cope with huge debt. There have been food shortages and rioting, which led to the resignation of President Soeharto in May.
Separately in New York, the Standard and Poor's Corp. credit- rating agency confirmed a negative outlook for Indonesia, reflecting "continuing uncertainty regarding the new government's commitment to political and economic reform."
Rupiah
Indonesia's Coordinating Minister of Economy and Finance and Industry Ginandjar Kartasasmita said on Wednesday he expected the rupiah to recover to 10,000 or better against the U.S. dollar before year-end.
"I expect the rupiah to recover to 10,000, and actually better than 10,000 against the U.S. dollar before the end of the year," Ginandjar said, adding that global investor confidence should be restored as Indonesia reschedules its debt.
The rupiah traded near 15,000 per dollar on Wednesday.
Ginandjar spoke to Reuters after taking part in talks with creditors at Chase Manhattan Bank headquarters in New York.
"I expect the outlook for Indonesia to improve as we go past our political transition, with general and presidential elections," Ginandjar said.
The Indonesian minister also said he expected economic and political stability to contribute to the strengthening of the currency and Indonesian equities.
"As the rupiah rises, stocks will go up too," he added. "The recovery in Japan would be very crucial to improving the situation in Indonesia."
Ginandjar has added meetings with a host of high-level U.S. officials, including Treasury Secretary Robert Rubin, to his agenda yesterday and today while he is on Washington, Indonesian embassy officials said Wednesday.
On Thursday, Ginandjar was scheduled to meet with U.S. Export- Import Bank Chairman James Harmon, U.S. Defense Secretary William Cohen, U.S. Federal Reserve Chairman Alan Greenspan and Gene Sperling, who chairs the White House's National Economic Council.
He was also expected to attend a luncheon with the U.S.- Indonesia Society, hosted by the Indonesian Ambassador.
He would have dinner with Stanley Fischer, deputy managing director of the International Monetary Fund in the evening.
On Friday, he is scheduled to meet with Rubin and Deputy Treasury Secretary Lawrence Summers at 9:30 a.m. and 10:00 a.m., respectively. Those meetings are on top of already planned meetings with IMF Managing Director Michel Camdessus for lunch at 1:00 p.m. and World Bank President James Wolfensohn at 4:30 p.m. Friday.